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Dec 1, 2009

IDB approves financing for power transmission project in Argentina

Credit will enable completion of Norte Grande electricity transmission line and complementary works

The Inter-American Development Bank approved $300 million in additional financing to Argentina for the completion of a 1,220-kilometer 500 kv power line and support the provincial and regional transmission and sub-transmission works that are part of the Norte Grande Development and Integration Program.

The interconnection line, linking the northwest and northeastern regions of the country, will optimize the country’s power generation system, paving the way for lower fuel consumption and a reduction in greenhouse gas emissions.

The new IDB financing will complement a $580 million loan approved by the Bank in 2006. The supplemental loan will cover an increase in total program costs resulting from the prices obtained in an international bidding that reflects the higher prices for equipment and materials, mainly steel, aluminum and cement, and an increase in local labor costs and other inputs required to build the project. Under the additional financing scheme, local counterpart funds for the project will also be increased by $212.5 million from an initial amount of $145 million agreed in 2006.

The Norte Grande Development Integration Program is part of efforts by the Argentine government to normalize its power sector. The Program is also a prerequisite for alleviating poverty and narrowing the social and economic development gap between the Norte Grande region and the rest of the country.

The IDB loan is for a 25-year term, with a five-year grace period at a variable interest rate.